Which statement about Customer Due Diligence for AML is true?

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Prepare for the Qualified Financial Adviser (QFA) Exam 1 with flashcards and multiple choice questions with helpful hints and explanations. Gear up for success!

Multiple Choice

Which statement about Customer Due Diligence for AML is true?

Explanation:
Customer Due Diligence for AML combines knowing who the customer is with watching the relationship over time. Verifying identity confirms the person or entity behind the account and that the documents and information provided are legitimate. Ongoing monitoring means continually reviewing transactions and behavior to detect unusual or suspicious activity and adjust the risk assessment as needed. Together, these elements define CDD. Verifying identity and monitoring the ongoing relationship best represents CDD, while focusing only on identifying identity or addressing marketing or data protection alone does not capture the full requirement.

Customer Due Diligence for AML combines knowing who the customer is with watching the relationship over time. Verifying identity confirms the person or entity behind the account and that the documents and information provided are legitimate. Ongoing monitoring means continually reviewing transactions and behavior to detect unusual or suspicious activity and adjust the risk assessment as needed. Together, these elements define CDD. Verifying identity and monitoring the ongoing relationship best represents CDD, while focusing only on identifying identity or addressing marketing or data protection alone does not capture the full requirement.

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